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Meta faces new FTC lawsuit for VR company acquisition

The FTC wants to stop Facebook-owner Meta from acquiring virtual reality company Within Unlimited. The FTC alleges that VR is a space in which Meta already dominates.

The Federal Trade Commission is again coming after Facebook-owner Meta for anticompetitive business practices -- this time in the virtual reality space.

On Wednesday, the FTC sued Meta in an attempt to block its acquisition of virtual reality technology company Within Unlimited and its VR fitness app Supernatural. The FTC in a press release said Meta's "virtual reality empire" already includes a virtual reality fitness app and alleged Meta is attempting to "buy its way to the top."

"Meta already owns a best-selling virtual reality fitness app, and it had the capabilities to compete even more closely with Within's popular Supernatural app," John Newman, FTC Bureau of Competition deputy director, said in the release. "But Meta chose to buy market position instead of earning it on the merits. This is an illegal acquisition, and we will pursue all appropriate relief."

According to Meta's statement in response to the lawsuit, the FTC's case is "based on ideology and speculation, not evidence."

"The idea that this acquisition would lead to anticompetitive outcomes in a dynamic space with as much entry and growth as online and connected fitness is simply not credible," according to the statement.

It's not the first time the FTC has accused Meta of buying out the competition. In an ongoing lawsuit against the company, the FTC alleged that Meta's previous Instagram and WhatsApp acquisitions served to kill what the company viewed as competition to its popular social media site Facebook.

The FTC said VR is an industry "characterized by a high degree of growth and innovation," and Meta isn't the only company whose VR acquisition is getting scrutiny. Microsoft's $68 billion acquisition of video game publisher Activision Blizzard is facing a competition probe in the U.K. and is under review by the FTC.

Companies embrace virtual reality, the metaverse

During Meta's earnings call Wednesday, Meta CEO Mark Zuckerberg described the metaverse as a "massive opportunity" and said by investing in developing platforms to support the metaverse, it could unlock "hundreds of billions of dollars if not trillions over time." The metaverse is a digital world where users can shop, work and interact virtually online.

Meta chose to buy market position instead of earning it on the merits. This is an illegal acquisition, and we will pursue all appropriate relief.
John NewmanDeputy director, FTC Bureau of Competition

"By helping to develop these platforms, we're going to have the freedom to build these experiences the way that we in the overall industry believe will be best rather than being limited by the constraints that competitors place on us," Zuckerberg said during the call.

Indeed, multiple companies have invested significantly in the metaverse and VR technologies, said Peter Evans, managing partner at the Platform Strategy Institute, during the MIT Platform Strategy Summit.

Evans said as evidenced by the increase in mergers and acquisitions for virtual reality companies, the "players are now jockeying for position" in the virtual world he said will transform industries. Large companies including financial firm JP Morgan and retail giant Nike have already purchased land in the metaverse.

Many metaverses exist such as Decentraland, The Sandbox and Otherside, using their own digital tokens where users can buy land and exchange digital assets. Evans said the market capitalization of metaverses Decentraland, SAND and Otherside alone totals $4.3 billion.

"These aren't just game worlds, they are entire economies," he said.

Makenzie Holland is a news writer covering big tech and federal regulation. Prior to joining TechTarget, she was a general reporter for the Wilmington StarNews and a crime and education reporter at the Wabash Plain Dealer.

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